A key tech industry bank’s sudden collapse this week was the second-largest in U.S. history, putting Silicon Valley on edge as the federal government took over the operation on Friday.
The scale of California-based Silicon Valley Bank’s failure – it had around $209 billion in assets at the end of 2022 – comes second only to the $307 billion collapse of Washington Mutual in 2008, the Washington Post reported.
The bank inspired a run on deposits Wednesday night with a surprise filing that it had sold $21 billion in assets to improve its balance sheet, raising the possibility that funds held there by tech start-up founders and venture capitalists could be lost.
In a statement, the Federal Deposit Insurance Corporation said it took over the bank on Friday and transferred all deposits to a newly-created bank. The FDIC said “full access” to insured deposits should be available “no later than Monday morning.”
Silicon Valley Bank – which partnered with nearly half of all U.S. venture-backed tech and healthcare companies, according to CNN – had been key to funding the risky start-ups that are a signature of the tech industry.
“They have a 40-year reputation earned the hard way built on the most extensive network of insider relationships with Silicon Valley’s most important players,” venture capitalist Antoine Nivard told the Post.
The federal takeover came before a wider market downturn around the world on Friday, CNN reported. A Reuters analysis found that U.S. banks lost more than $100 billion in stock market value from Wednesday to Friday.
Treasury Secretary Janet Yellen said she was “monitoring very carefully” how the situation affects other banks, the Wall Street Journal reported.
“When banks experience financial losses, it is and should be a matter of concern,” Yellen said during a House Ways and Means Committee hearing.
This was a breaking news story. The details were periodically updated as more information became available.